Controversial Rating System Operating within Our Site's Realm, Drawing strong political undertones
In 1981, France found itself at the bottom of the list among major industrialized countries, with net bond emissions representing just 2.18% of its Gross Domestic Product (GDP). This fact was lamented by René Monory, the Minister of Economy at the time, who wished to acclimate the American method of "rating" to France.
This method, systematically classifying issuers according to their beneficial capacities and financial size, was championed by credit rating agencies such as Fitch, Moody's, and Standard & Poor's (S&P). The concept of credit rating agencies was first introduced in Le Monde on March 23, 1979.
Fast forward to October 4, 1982, when François Renard, Monory's successor as Minister of Economy, announced a "large" State loan of 25 billion francs for investments. This loan was intended to be a "record" difficult to beat, marking a significant move towards modernity and investment in the name of the economy.
However, political instability and an inability to reduce public debt led to France's debt rating being downgraded. On September 12, 2021, Fitch downgraded France's debt rating from AA- to A. This downgrade was a stark reminder of the challenges faced in managing the nation's finances.
It's important to note that this historical context was set against the backdrop of a significant political shift. François Mitterrand and the left came to power in 1981 with an ambitious program of social reforms. During Monory's tenure as Minister of Economy from 1978 to 1981, he advocated for more borrowing in support of these reforms and modernisation efforts.
The French State loan, announced in October 1982, was scheduled to be launched at the end of 1982 or the beginning of 1983. René Monory, who had left office by then, had expressed concerns that the State's emissions were not continued and developed, a concern that would prove to be prescient in light of future events.
In conclusion, France's history with emissions and state loans provides a fascinating insight into the country's economic policies and the challenges faced in managing its finances. The downgrade in 2021 serves as a reminder that these challenges persist, and the need for careful financial management remains paramount.
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